North Sea job cuts expected due to low oil prices

Mark Thompson

UK oil and gas production surpassed expectations in 2015 but more redundancies are on the horizon due to continuing low oil prices, according to an industry body.

Oil & Gas UK said production rose by around 7%-8% last year, defying projections that there would only be a marginal increase in 2015.

But it said times remain tough for the industry and its workers, with more job losses expected in the next few months.

Oil & Gas UK's chief executive Deirdre Michie said: "Government data for the first 10 months of 2015 shows that the total volume of oil and gas produced on the UK Continental Shelf (UKCS) was up 8.6% compared with 2014, with the production of liquids up 10.6% and gas up 6.1%.

"Output in November and December tends historically to be more stable, but even so, Oil & Gas UK now expects year end production for the full year of 2015 to be 7%-8% higher than last year.

"Given the difficulties being faced by the industry this is welcome news.

"In February 2015 we predicted a marginal increase in production for 2015, but the industry-wide focus on improving production efficiency coupled with investments of more than £50 billion over the last four years to bring new fields on stream across the last 12 months is paying off and yielding a better result.

"The upturn underlines the industry's commitment to the UKCS - which still holds great promise for the future and is vital for the country's security of supply.

"For example, only last week, oil company Taqa announced first production from the Cladhan field north-east of Shetland, estimated to produce 10,000 barrels of oil a day from the UK's waters.

"While the UK offshore oil and gas industry is having to adapt to the low oil price and driving greater efficiencies throughout its operations, the fact is that the value of our product has more than halved.

"Times are really tough for this industry and for the people working in it.

"We will continue to see job losses as we move into 2016 and we must be thoughtful and supportive of our colleagues and their families who are being made redundant or who are at risk of being made redundant.

"As we go through these times, we have to be resilient and focus on what we need to do to get us through the coming months to ensure an enduring industry for the future."

SNP energy spokesman Callum McCaig said: "These are extremely encouraging production figures for our North Sea oil and gas industry - which is showing resilience in the face of global challenges.

"Industry-led initiatives to increase production efficiency are reaping positive results; however dithering from the Tory government in incentivising exploration and development of new prospects is still a serious concern. In fact, it is an approach which shows utter disdain for an industry under pressure.

"Today I am calling on George Osborne to set himself a New Year's resolution - 2016 must be a year of action from the UK government. It's high time the Chancellor heeded the SNP's longstanding call to introduce exploration incentives in the North Sea, to protect jobs and sustain a vital industry."

North East Scottish Labour MSP Lewis Macdonald said: "The oil jobs crisis was ignored for too long by the SNP Government in Edinburgh simply because it was politically embarrassing for them.

"We have seen thousands of jobs lost not just in the North East but right across the supply chain.

"The SNP Government should asses the impact of the oil jobs crisis on the wider Scottish economy and commit to publishing regular oil and gas bulletins with a specific focus on the impact of oil prices on jobs."